SOMERVILLE, N.J. – The former CEO of Merck & Co. claims Merrill Lynch pushed a useless $276 million life insurance policy on him to collect a $4 million annual premium. Dr. P. Roy Vagelos claims that when he brought the chicanery to the attention of higher-ups, the man who sold him the policy was “asked to retire.”
Dr. P. Roy Vagelos says he spent more than 20 years building Merck into a worldwide pharmaceutical giant. He says he took his wealth to the Merrill Lynch Bank & Trust Co. and trusted the head of the Family Office Group, defendant and former Merrill Lynch VP Thomas Kozlowski, with his fortune, and with his Social Security number, the Social Security numbers of his family members and heirs and all of his banking account and financial information.
Vagelos, 72, claims Kozlowski sold him a life insurance policy that named him the beneficiary and his adult children as the insured in a scheme to protect $276 million – 60 percent of his estate – from taxes.
Vagelos said he asked to invest the money into municipal bonds that yielded 4.5 percent return, but Kozlowski steered him toward the life insurance policy, promising that the funds would be liquid and that the return on the policy would be the same as municipal bonds but with inheritance-tax protection for his heirs.
Vagelos claims Kozlowski lied about the life insurance policy and about other questionable investments, and when says that when brought the matter to supervisors at Merrill Lynch, Kozlowski was “asked to retire” from the financial firm.